Question

Short-term financing is generally needed to finance ________.​

Answer 1

Answer:

Ooh yes, you have understood it right. It is the credit extended by the accounts payables. We would classify this credit into 2 types – free trade credit and paid trade credit. After a particular no. of days as per payment terms, the supplier charges interest on the delay of payment. So, the period before this is free trade credit and after that is paid trade credit.